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Reliance enters quick commerce, acquires 25.8% stake in Dunzo

By Abhishek Goel 7th January 2022

With the $240 million investment, Reliance Retail will own 25.8% of Bengaluru-based startup Dunzo, allowing them to enter the quick commerce sector. This deal will make Reliance retail the largest shareholder in Dunzo.

On-demand delivery startup Dunzo provides access to speedy delivery to India’s largest conglomerate—one of India’s hottest startup concepts, attracting plenty of investors. 

The agreement provides Dunzo with enough strength to fight with the existing competition that includes – Blinkit (formerly Grofers), new startup Zepto, Swiggy-owned Instamart, and BigBasket, among others, in delivering groceries and essential items to urban households quickly.

Blume Ventures, Google, and Lightbox Ventures are among Dunzo’s other investors. Lightbox, Lightrock, 3L Capital, and venture debt firm Alteria have also made investments.

Reliance’s debut into the fast-developing quick commerce industry comes at a time when considerable funds are being invested in businesses such as Blinkit (formerly Grofers), Mumbai-based Zepto, and Swiggy’s Instamart. BigBasket, which is owned by Tata, is also set to launch its 15-30-minute delivery service shortly.

From Dunzo’s CEO:

“Since our inception, we have been razor-focused on providing an unmatched customer experience and this funding round is a validation of our approach. I am proud of the team for tirelessly building the category over the last three years,” Biswas said in a statement.

“With the investment from Reliance Retail, we will have a long-term partner with whom we can accelerate growth and redefine how Indians shop for their daily and weekly essentials”

The 10-minute grocery delivery craze has expanded globally, with businesses like Jokr, Getir, and Gorillas offering it in locations ranging from New York to Turkey to London. 

The director of Reliance Retail Ventures, Isha Ambani stated that they saw a shift in the consumption patterns to online and they were impressed with how Dunzo has been disrupting this space. She also stated that Dunzo is the pioneer of quick commerce in India. 

The future for Dunzo:

The Reliance-Dunzo deal has more than quadrupled the Bengaluru-based firm’s worth to $775 million, up from about $300 million.

Merchants will get access to the hyperlocal delivery network of Dunzo to support growth as they move their business online through JioMart. 

Dunzo plans to utilize the fresh funds to expand its quick commerce operation, Dunzo Daily, to 15 locations this year and to power it through its dark stores. It will operate two major businesses: a consumer delivery service for groceries and necessities, and a business-to-business (B2B) vertical in which it will sell its delivery fleet to enterprises. Every month, around 15,000 local retailers utilize it. 

Currently, Dunzo Daily is operational in Bangalore and offers a 19-minute grocery delivery service. 

Dunzo has around 60 dark stores (micro fulfillment centers) in India, and Biswas hopes to expand to 200 cities in the next six to nine months. Its current monthly delivery fleet is around 40,000 individuals, and it intends to add more as it spreads across the country.

Apart from its own JioMart business, this is Reliance’s second significant entry into the grocery delivery industry. It also acquired Milkbasket last year, which is into the milk delivery business and delivers milk and other daily necessities to homes in Delhi, Bengaluru, and other cities.

Rising competition:

Kabeer Biswas, CEO of Dunzo believes that they will face a lot of competition in the market. He also believes that the big consumer behavior that’s getting digitized in the country. Biswas said that this industry is surely bigger than the food delivery industry and has a vast potential comparatively. To stand out from the rest, Biswas stated that they will also deliver non-grocery items in the near future. Even Blinkit recently stated that they will step in the non-grocery delivery items and expand the range of products. 

More and more companies are disrupting this space and stepping in to deliver items within minutes. Customers these days prefer the convenience and hence, these companies are gaining more demand as they grow. 

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